In yesterday’s budget, Chancellor Phillip Hammond announced that a childcare scheme which could save parents up to £2,000 a year will be rolled out next month.

The ‘tax-free childcare scheme’ had already been proposed by Government, but now we know it will start from April.

Here’s everything you need to know about the new policy, how it will work and how you can get your share.

What does the scheme offer?

It’s a way for the Government to help working parents and carers pay for childcare — particularly useful for those whose employers don’t offer any system of childcare vouchers.

The new system will see the government contribute 20p for every 80p that parents spend on care costs.

This is the equivalent of the 20% tax many people pay on their earnings - hence the name ‘tax free’.

The maximum contribution is £2,000 a year for children up to the age of 12, or £4,000 a year for a disabled child up to the age of 17.

How much you pay into the account, and when, is up to you, and you can use it more at certain times of the year if you need to, eg. over the school holidays.

Who is eligible?

A toddler playing with toys as spiralling childcare costs mean that for many families "it simply does not pay to work", a major report has warned (Image: PA)

You can apply for the scheme if your child is less than 12 years old, or if they are less than 17 and receiving Disability Living Allowance, a Personal Independence Payment or an Armed Forces Independence Payment.

You can also access the scheme up to 17 if your child is severely sight-impaired or blind.

The parent or parents using the scheme must be working.

They should expect to earn at least £115 per week if they’re over 25, or if they’re under 24 or an apprentice, you should earn the equivalent of at least 16 hours of work per week at the national minimum wage rate for their age.

Self-employed people with a registered business can also apply.

Households where one parent earns more than £100,000 cannot take part in the scheme.

While both parents must be working to qualify, those temporarily absent from the workplace such as those on paid or unpaid maternity, paternity or adoption leave will still be eligible.

What can I spend the money on?

British Chancellor Phillip Hammond (Image: Getty Images Europe)

Money can be used to pay for up to 10 childcare providers.

It can pay for:

- Childcare with regulated (approved or registered) childcare providers, for example, nurseries, play scheme, registered childminders or out-of-hours school clubs

- Advance payments, block bookings and individual sessions

- The costs of employing a nanny or extra childcare if using a workplace nursery